Purchase and Sale of Business
At Absolute Legal Services, we have more than 25 years experience acting for Central Coast business owners on purchase and sale of business, from smaller businesses such as take-away food shops, hairdressing salons, lawn mowing businesses, beauty salons to larger scale business such as real estate agencies, retail and wholesales outlets, equipment hire businesses, medical practices etc. Buying or selling any business is a major decision both financially and emotionally.
Do you need a solicitor to act on a sale or purchase of a business?
No, I have heard of many clients buying or purchasing businesses without legal advice that have been lucky enough not to have any legal or taxation problems arise, although those persons still could face legal or taxation problems in the future. On the other hand, I have encountered numerous queries from persons who have acted for themselves facing horrendous problems such as, securing expensive and long term Leased premises before payment of final price (no written contract) and then the Vendor refusing to sell but refunding any monies paid. Those people were faced with a Lease for 3 years without a business. Another was no formal agreement for a local well-known brand, there was no restraint of trade and the vendors re-opened a new store 2 kilometers away. You can see from the lists on the links below that there are numerous facets to the sale and purchase of any business, which should be appropriately documented, in a formal sale or purchase agreement to avoid any repercussions in the future. In addition, skilled and expert negotiations prior to being bound to proceed can avoid serious problems arising in the future. For many business sales and purchases, other important documents will be the Lease of the premises and franchise agreements – see below. Whether you are selling or buying a business it is highly recommended that you seek legal and financial advice.
Business structures and entities – Company, Trusts, Partnerships, Joint Ventures
In conjunction with your financial advisor, Absolute Legal Services can assist you to choose the most appropriate structure for your business and assist in arrangement for incorporation of companies, setting up discretionary and unit trusts, simple and complex partnerships and joint ventures.
At the outset, you should talk to both your solicitor and financial adviser. Detailed below is a list of common matters for consideration when selling a business.
- Is it the whole or part of the business
- Business Names, patent and trademarks, registered designs or logos
- Financial records up to date including values of equipment
- Ensure all leases for premises, equipment and motor vehicles are up to date
- Are there any hire purchase agreements.
- Details of bank loans and overdrafts, are any of these secured over the business.
- Client records
- Detailed inventory of equipment and whether owned by the business or other
- Details of staff, employment contracts
- Other Agreements associated with the business, client agreements, distributor agreements, franchise agreements.
- Council approval for use of the premises of the business.
- Website,
- Advertising arrangements
- alk to your accountant regarding values of various components of the business, and taxation implications in valuing various components of the business, GST (generally a sale of a “going concern” with no GST payable), whether to delay the sale for a period so that taxation consequences can be minimised in the next financial year.
- Obtain a valuation of the business to assist in determining a sale price
- Work in progress or hire in progress
- Do you wish to be restrained from opening a similar type of business?
- Evidence of Compliance with required laws eg. Workcover etc
- Water supply permits
- Special waste arrangements
- Transfer of company name
- Stock levels, is stock included in the price or in addition to the price, what is the value.
At the outset, you should talk to both your solicitor and financial adviser. Detailed below is a list of common matters for consideration when buying a business.
- Finance for the purchase price
- Obtain at least 3 years of accounting records from the Vendor
- Accountancy advice on the Vendor’s taxation records
- Advice as to business structure, sole trader, partnership, company, trust or other by solicitor and accountant
- Is it the whole or part of the business
- Business Names, patent and trademarks, registered designs or logos
- Ascertain details of leases for the premises, equipment, motor vehicles.
- Are there any hire purchase agreements.
- Details of client records and systems.
- Detailed inventory of equipment and whether owned by the business or other
- Details of staff, employment contracts
- Other Agreements associated with the business, client agreements, distributor agreements, franchise agreements.
- Council approval for use of the premises of the business.
- Website and Advertising arrangements
- Work in progress or hire in progress
- Do you wish the Seller to be restrained from opening a similar type of business?
- Evidence of Compliance with required laws eg. Workcover etc
- Water supply permits
- Special waste arrangements
- Transfer of company name
- Stamp duty
- Transfer of lease or new lease of premises
- Inform you in detail about the rights and responsibilities with your commercial transactions;
- Draft appropriate documentation to meet your requirements
- Assist you in the negotiation stage.
- Ensure contracts and other legal documents clearly meet your requirements.
- Provide you with full copies of all your legal documents
- Provide written Costs Disclosures with either a fixed legal fee or an estimate of your legal fees and Costs Agreements
- Advise you in relation to pitfalls and other aspects that you may not have considered.
